state of the city and budget council presentation

8/9/2019 State of the City and Budget Council Presentation

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State of the City andFY2011 Draft Budget

Review


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State of the City and FY2011Budget Review

TO DATE WE HAVE ACCOMPLISHED MUCH

Our neighborhood watch program continues to grow and out ofthose discussions, we have found a way to hire two additionalpolice officers.

We have worked with local groups such as the CommunityCoalition to formulate a Youth Commission and we hope tohave that group up and running in the very near future.

We have begun massive road paving improvements in ourcorridors and in our downtown region.

We have worked with a new community group called DevelopNorth Adams who just announced their plans to promotebusiness growth, marketing, and events for our city.

We continue to partner with MCLA and MASS MoCA to findways by which we can more fully connect the dots betweentheir campuses and the downtown.


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Develop North Adams, is currently working on beautifyingsome of our small green spaces to create pocket parksin the downtown corridor.

We will soon begin a cleanup of the old tannery site thatwill spur the development of the Blackinton Mill.

We have begun having discussions regarding a viableMohawk Theatre Project.

We continue to move forward with the development ofSuper Walmart.

We continue to work towards completion of the massiveairport reconstruction effort.

We just completed the most successful CommunityCleanup Day everin conjunction with MCLA


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We should be seeing some very nice visible thingsthis summer

Pocket parks Benches on Main Street and the Veterans Memorial Public gardens

Concerts at the Joe Wolfe Field complex in August Wilco at MoCA The Down Town Celebration The Food Fest Possibly some murals or public art

I would love to light the Noel Field walking track,playground, basketball court, and tennis courts till 10:30every night for our youth and residents

Birth of a Youth Commission


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We have put closure to the inherited and longstandinginsurance issues with our unionsand let me say we did thiswhile in constant contact with the Department of Revenue.

We are having conversations with private investors withrespect to both business development and housing.

We have spoken with and continue to have dialogue with twocompanies that are very interested in placing a solar cap onour landfill, helping to reduce our energy costs.

We continue to move towards fulfilling the criteria to becomea Massachusetts Green Community.

We have fully appointed many commissions and boards andcontinue to work to get that completely done.


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We have been awarded a grant from the Berkshire RegionalPlanning Commission that is allowing us to study years ofpast planning documents. We are doing this with the ideaof developing a new document that will result in acommunity visioning process, hopefully as soon as this fall.This will be the first step towards long term planning for our

City. We have enhanced our website to provide more accurate

information as to public meetings, minutes of thosemeetings, published agendas, and more.

We have empowered our City Council, School Committee,Boards and Commissions and are utilizing them in ways

that have not happened in years.


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I received the keys to this city on January 4th and sincethat time, have struggled with the many things that wewill be discussing here tonight. Shortly after enteringoffice I met with department heads, created a Finance

Team, created an Executive Team, and spent many

hours on the phone and in person visiting with ourlabor lawyer and the Department of Revenue. I alsotoured all of our schools, visited all city buildings, andviewed all problematic infrastructure.

As these meetings became more regular and

intense, I began to truly see the trouble our Cityis in.


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We have one of the lowest cash positions in theCommonwealthvirtually no financial reserves

Our infrastructure at all levels, water and sewer,DPW, Public Safety, equipment, all in deplorableconditionleft to be patched and patched again

Three of our city dams and many old walls needsignificant and very costly work and repairs

This city owns way too much property and we haveto find a way to sell The city should not be alandlord, competing with the private sector

A transfer station/landfill issue that has been anightmare for residents, employees, and mostspecifically the people in that neighborhood


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8 union contracts to settle two of those unionswithout contracts for the past two years

We had the threat of arbitration and potential law suitdue to the Medical Insurance Trust issuewhich iflitigated, would have probably cost the city millions incourt costs and damages

Millions in recurring debt and operating expenses beingpulled from our budget and paid from reserve accounts.These past fiscal practices are now haunting our budgetand truly keeping this City from moving forward

We have a city with significant needs and not enoughstaff to take care of those needs.


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Here are some of the fiscal facts:

Free Cash as a % of Tax Levy Free Cash plus(as of 12/31/09) Stabilization funds

Adams 35.90% $ 2,805,000

Williamstown 8.84% $ 1,165,000

Clarksburg 40.56% $ 503,000

Florida 24.28% $ 467,000

Pittsfield 13.98% $ 8,427,000

Greenfield 7.75% $ 1,881,000

North Adams - .03% $ 313,000


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We have the lowest per capita income in BerkshireCounty at $16,381

We have the highest unemployment rate at 11.2%

New growth continues to erodeputting increasinglymore pressure on the existing tax payers and businesses

State aid as a percentage of our overall receiptscontinues to be problematic

In the past 4 years, the average single family tax bill hasincreased 19% from $1453.00 to $1729.00 and itcertainly will be up again this coming fiscal year


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Our local receipts since FY2006 have dropped 10% orapproximately $634,000

Alarmingly, our free cash on July 1, 2001 was $3.3million.today it is $307,000.

In the past three fiscal years, we have used $3.4 million

from reserve accounts to pay recurring expenses such asretirement of debt, transfer station expenses, policesalaries, cemetery salaries, fire salaries, etc.

So while free cash is virtually gone, most of our reserveaccounts have been used up to include our Sale of CityLand, Landfill, Parking Meter, Sale of Cemetery Lots and

Perpetual Care, Technology, and our Tax Overlayaccountsall virtually depleted in the past two years topay recurring expenses.


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So now we are in the perfect stormwehave seen:

Extensive state cuts over the past three years in

excess of 17% The past fiscal practices of reducing the budget

and then utilizing reserves to pay recurring longterm debt and operating expenses

The past mantra that low taxes equals good

fiscal management Past fiscal management that has caused

our house of cards to collapse.


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We have spent hours with the citysfinance team and have been inconstant contact with the

Department of Revenue at both theregional and state levels. They are infull agreement with our assumptions

and quite honestlythey helped inthe formation of much or what I willcover next.


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ALL INDICATIONS OF A VERY BLEAK FINANCIALPICTURE ARE PRESENT:

No Cash

No Reserves

Crumbling infrastructure years of deferred maintenance Using cash reserves and not revenues to pay the bills

Under-utilization of revenue sources

Shrinking local economy

More of our residents on some sort of public assistance

Higher drug and property crime


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We are currently working on some initiatives to help withrevenues

Investigating the sale of city parcels and buildings to include theWindsor Mill

Capping the landfill with solar to reduce our energy costs

Looking at alternatives for the transfer station that could reduce

costs and increase revenues Looking at increases in water rates (third year without an increase)

Looking at a sewer fee

Better utilization of Windsor Lake and the Campground

Creating partnerships and collaborative purchasing efforts withneighboring communities

Consolidation of utility accounts throughout the city so that we canbetter manage those costs

More calculated assumptions for revenuemost specifically ourlocal receipts


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As for growthI have been meeting with thefollowing to discuss current and futureopportunities:

MCLA MoCA

MA Development Berkshire Regional Planning

Berkshire Economic Development Our neighboring Town Administrators The Governor Congressman Olver

Representative Bosley Senator Downing Local business leaders and developers


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NOW I HAVE SOUNDED PRETTY HARSHSO FAR BUT.There are many greatthings happening:

Roads

Bridge Sidewalks

Airport

Community Groups

Community excitement

$50 million in Science Center development atMCLA


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I also was blessed to inherit so manywonderful and supportive folks who

are stepping up in ways that I hadonly dreamed ofto help pull us upand out of the position we are in.


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We have created two new groups:

Develop North Adams Group of community leaderswho will be working to entice small business, re-brandand market the community, and work on communityevents

Community Economic Development AdvisoryBoard this group will be a vital component of thegrowth process for North Adams and will be at theforefront of the planning document we will be receivingsoon from Berkshire Regional Planning. We will behosting community visioning processes later in the year.

Without growthover timein all sectorswithout new jobsgood jobswe will not growITIS THAT SIMPLE!


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We should be seeing some very nice visible things thissummer

Pocket parks Benches on Main St and the Veterans Memorial Public gardens

Concerts at the Joe Wolfe Field complex in August Wilco at MoCA The Down Town Celebration The Food Fest

Possibly some murals or public art of some sort

I would love to light the Noel Field walking track,playground, basketball court, and tennis courts till 10:30every night for our youth and residents

Birth of a Youth Commission


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First let me explain the settlement of the Medical Insurance Trust and itsimpact on the budget and on taxes going forward.

Settlement was in reaction to an ongoing issue or underfunding the MIT by theprevious administration

Upon entering office, I retained the services of Scanlon and Associates to confirmor deny the allegations

Scanlon confirmed the City had not been paying its fair share of insuranceworking rates/premiums in FY2008, FY2009, and FY2010 Exposure wasidentified at a number in excess of 1.6 million.

I approached the DOR for their guidance and worked with the citys labor lawyerto create a strategy

Because we have no cash reservesit was determined that any settlementwould have to be borrowed or amortized

To do that, the City would have to tax in FY2011 to its full levy capacity Thiswould indicate a minimal increase in property taxes of 10%

Settlement with city employees based on previous practice of underfunding, willcost approximately $800,000 over the next three years


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Certified Free Cash:

FY2005 $1,479,000

FY2006 - $ 906,000FY2007 - $ 965,000

FY2008 - $1,344,000

FY2009 - $ 310,000


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Other Available Funds FY2009:

City Reserve Accounts Sale of City Land Account

Parking Meter Reserve Account

Sale of Cemetery Lots Technology Account

Cemetery Perpetual Care Account

Overlay Surplus Account

These surplus accounts totaled

approximately $3,040,000 in FY 2009Today approximately $1,300,000


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Local Receipts projections over the pastthree Fiscal Years have fallen short:

FY2007 95.45%

FY2008 98.27%

FY2009 94.62% FY2010 95% projected based on YTD

We have worked very hard at projectinglocal receipts for FY2011 and we are confident,

as is the Department of Revenue, that ourprojections, while conservative, are very realistic.


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Budget

FY2009 FY2010FY2011 (draft)

School $14,851,697 $15,550,212

$15,637,641

City $20,284,437 $19,666,638$20,002,060

MA Assessments $ 5,249,650 $ 5,113,699 $

4,793,163

Total $40,385,784 $40,330,549$40,432,864


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Receipts

FY2009 FY2010 FY2011 (draft)

State Aid $20,928,335 $18,997,071 $18,013,739

Local Rec. $ 6,865,835 $ 6,545,692 $ 7,302,000 ?

Local Taxes $11,052,149 $11,601,588 $12,760,113 ?

SBA Reimburse $ 659,939 $ 659,939 $ 659,939

Med Ins Trust $ 880,000

Total $39,506,258 $37,804,290 $39,615,791


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FY2009 FY2010 FY2011(draft)

Budget $40,385,784 $40,330,549 $40,432,864

Receipts $39,506,258 $37,804,290 $39,615,791

Deficit $ (879,460) $(2,526,259) $ (817,073)

Appropriated $ 879,460 $ 2,526,859

from Free Cash and Reserves to balance budget

Total Free Cash and Reserves utilized to balance FY2009 &

FY2010 budgets = $3,408,385


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Why the large jump in Local Receipts?

Proposed 10% increase in water fees (average

homeowner cost of $26.00 annually) Proposed sewer fee (average homeowner sewer

fee approximately $118.00 annually 42% ofaverage water bill)


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Why the large jump in Real Estate Taxes?

Because we have to amortize the run out of the MedicalInsurance Trust, the Department of Revenue mandates thatwe have to bill to our full tax capacity. This would result inan approximate 10% increase in real estate taxes.

The reality is that with or without the MIT issue wewould have had to tax to the levy capacity to fundour budget OR suffer MORE SIGNIFICANT CUTS!


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HOW DO WE FIXTHIS?

I am suggesting threescenarios


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Scenario 1

10% tax increase - $183 on average $140,000 home 10% water rate increase - $26 on average water bill Sewer fee 42% of water bill or $118 on average

Monthly average increase cost to homeowner= $27.25

Plus utilization of Water Shed Account to

offset debt in excess of $800,000, which will allbut diminish our cash reserves


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Scenario 2

If there is compromise between the Governor and theLegislature on local receipts and we receive more aidwe couldconsider a Proposition 2 override of $1,000,000.

This would raise our baseeliminate the need for a sewer fee,water increase and utilization of what precious little reserves wehave left

This would create an approximate 19% increase in taxesimpacting the average homeowner $333 annually


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Scenario 3 If there is no compromise between the

Governor and the Legislature on local receiptsand we receive aid as proposed by Ways &

Meanswe could consider a Propositions 2 override of $1,500,000. This would raise our baseeliminate the need

for a sewer fee, water increase and utilizationof what precious little reserves we have left

This would create an approximate 23%increase in taxes impacting the averagehomeowner $408 annually


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Scenario 1 Scenario 2 Scenario 3

Tax increase $183.00 $333.00 $408.00

Water increase $ 26.00

Sewer fee $118.00

Total impact $327.00 $333.00 $408.00

Scenario 1 would still need to utilize over $800,000 in reserves

Scenario 2 would fix the problem if there is a compromise in state aid without use of reserves

Scenario 3 would fix the problem if there is no compromise in state aid without use of reserves


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These are not pretty scenarios

These are not economically pretty times

We cannot continue to play the shell game withour finances

We cannot continue to count on the state or ourdwindling reserves to keep bailing us out

We are faced with significant budgetary obstacles

We are in a financial mess


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We need to make the financial adjustments toget our budget back on track

When the state finalizes their budgetI will bemaking my recommendation as to whatscenario I think will be our best fiscal fix

We need to consider not just how we getthrough this fiscal year but how do we plan forALL that lies ahead


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This fine City of North Adams has so muchpromise and potential

It is up to us to move this potential forward

I have inherited a fiscal messa managementmessI need your help and support to fix it

I intend to remain open and transparent

I pledgewith your helpto move this city

forward


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QUESTIONS??

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